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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Wednesday, 07 December 22
MARKET INSIGHT - INTERMODAL
China’s coal imports from January to October were 230.1m mt, a decrease of around 10.7% y-o-y (2021 totalled 323.2m mt). The question is if t ...
Wednesday, 07 December 22
INDIA'S STEEL MINISTRY SEEKS IMPORT TAX WAIVER FOR COKING COAL - SOURCES REUTERS REPORTED
India’s steel ministry has asked the finance ministry for a waiver of import tax on coking coal among a slew of raw materials, as it scramble ...
Tuesday, 06 December 22
INDIA'S COAL PRODUCTION RISES 17% IN APR-NOV PERIOD - PTI
The country’s coal production increased 17 per cent to 524.20 million tonnes in the April-November period of the ongoing fiscal.
...
Tuesday, 06 December 22
INDONESIA AIMS TO STARTS COLLECTING COAL LEVY IN Q1 2023 - MINISTER, REUTERS REPORTED
Indonesia aims to establish a coal fund agency and start collecting a coal levy in the first quarter next year, to help ensure supply security for ...
Saturday, 03 December 22
COMPLEX RUSSIAN PRICE CAP MAKES MARITIME VISIBILITY A MUST - WINDWARD
Many commentators and analysts are speculating about the potential impact the Russian seaborne oil price cap will have on organizations and entitie ...
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- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Australian Coal Association
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Star Paper Mills Limited - India
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
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